The Bank of Canada announced this morning that they have reduced their Target Overnight Rate by 25 basis points (.25%). This is the rate used by the big banks to determine their prime lending rate therefore Prime Rate should lower to 6.7% (aside from TD, which is higher). This would impact any borrowers with fluctuating rate mortgages and/or secured lines of credit. Here is an interesting link to review the history of this rate.
Although fixed rates have been trending down, most are still lower than the available fluctuating rates at the moment and it’s important to note that they are not directly correlated to the bank’s Prime Rate in the same way that adjustable and variable rate products are. A more significant influence is the US data so it will be important to note the results of their meetings at the end of July.
A .25% reduction will result in roughly $15 less in payment, for every $100,000 in mortgage (based on a 25 year amortization).
The next announcement is scheduled to take place on September 4. Most are saying it is too early to predict how the next one will go however given the poor economic growth and increase in lost jobs, many are remaining cautiously optimistic for another decrease.
To check your current rate and mortgage information, many lenders have online portals so I have put together a list of a few here:
First National Strive RFA MCAP RMG Scotiabank TD Coast Capital CMLS Merix Radius Manulife